Measuring Brand Equity – The First Crucial Step in Maximizing Value

Intangible assets are crucial to a company’s future. Assuring long-term growth and constant increase of shareholder value depend on the company maximizing its brand value.
Improving brand value should be a key goal for management and workers alike. To improve brand value, it must be constantly monitored and measured, as exemplified by the model described herein, which was developed for that very purpose.Accounting standards address the issue of measuring the value of intangibles, for instance through IFRS3, but these present methods for measuring brand value are flawed. One of the problems is that there is no distinction between goodwill resulting from the brand and goodwill in general. For another, a brand developed in-house does not appear in the books: it is not considered an asset. Its value only appears during an acquisition event, whether it is acquired alone or as part of a business operation. Bare accounting practices, as expressed in the company’s books, cannot provide a full picture of the company’s value, including all tangible and intangible assets.To illustrate the point, just compare the book value of companies versus their fair value (market value). Over the years, it has become apparent that intangible assets are driving value creation for shareholders. A study conducted over 20 years on the Russell 3,000 companies found a sharp shift towards intangible values. If in 1978, 95% of a company’s value was clear from the books, by the beginning of the 2000s that proportion had plunged to about 15%. Other studies carried out among S&P-500 index companies and among the 350 largest-cap companies listed on London’s FTSE delivered similar results – 70% to 75% of the companies’ values, respectively, could not be explained by their books.Let’s look at specific companies. In Disney’s case, 70% of its value can’t be explained through the book figures. For Heinz that ratio rises to 85% and for Microsoft, 98%. Coca Cola’s ratio is 80%. Where is the value coming from? Intangible assets, mainly the brand.Companies are increasingly beginning to grasp that they have to manage their intangible assets, just as they do their tangible ones. During the economic downturn in the early 1990s as part of the global economic cycle, companies slashed expenditure. They scaled back their tangible assets and stopped investing in supporting their intangible assets, including their brands – without carefully considering accruing and future outcome of these actions.In hindsight, we now know that companies who didn’t neglect their intangible assets, and continued to build and financially manage their brands, weathered the trouble. The capital markets applauded their sustained growth, too. As a retail giant, Wal-Mart for instance is highly vulnerable to market fluctuations: yet it did not cut back spending on branding, and in fact leveraged the recession to build up its brand even more, creating a sustainable competitive edge for itself. The lesson is that even when times turn rough, a company must not cease managing its portfolio of tangible and intangible assets. It needs not to stop spending, but rather spend effectively.The benefits of measuring brand value touch on almost every aspect of the business, from strategy and management to finances, marketing, and even the legal department. Brand value is a factor when analyzing returns on marketing drives, brand portfolio, or brand performance, even management performance. Brand value is key when evaluating a company for the purposes of M&A or in the event of ownership disputes, licensing lawsuits, partnership conflicts, and licensing agreements.The Tefen-Globes-Giza ModelThe model we developed is based on premium pricing, a method designed to calculate the current net value that the brand can be expected to produce for the company, and to other links in the value chain along the years.The model focuses on the basic role of the brand – to create a preference based on which the consumer can be charged a premium. Therefore, the monetary value that the brand creates is the total premium revenues collected from the consumer, minus the brand’s maintenance costs (advertising, support, and so on), capitalized based on the risk of the brand minus the rate of growth.How is the premium underlying the brand calculated? The premium is the difference between the branded product’s price, and that of the identical non-branded product available on the shelf. The premium is the end that which the consumer is willing to pay.The premium paid by the consumer is divided by the different value chain components. For example, the premium paid for Coca Cola, will be divided between Coca Cola, the brand owner, and the specific retailer selling the brand.Tefen and Giza carried out risk evaluation of each brand in the Israeli market, assessing the risks at three levels: sector risk, the specific risk of the brand, and the inherent risk of the brand owner. Each of these levels present different risks for the brand. The analysis compared these risks and focused on evaluating each and every brand by analyzing the ten most dominant parameters, such as degree of regulation, steadiness of demand, entry barriers, and intensity of competition. The lesser amount of risk, the greater the value the brand will hold.There are other models, alongside the Tefen-Globes-Giza model used in business circles to evaluate brand value. One such model is the Interbrand model. Developed by Omnicom, Interbrand ranks the leading brands in world markets each year and the leading brands in selected markets. The model’s methodology measures the brand value in three phases: financial forecasting – identifying revenues from the model or service that originate from the company’s intangible assets, and building an estimate of future revenues originating from the intangible assets over the next six years; the role of branding – identifying the proportion of revenues from the intangible assets that originate from the brand alone; and brand strength – to calculate the net present value of the brand’s revenues, a deduction representing the risk profile (time and likelihood of the scenario).The Tefen model, unlike the Interbrand model, can measure more than just the brand value of companies: it can also measure the brand value of products. This is especially significant in markets such as FMCG, where companies have developed into “houses of brands.” Leading companies such as P&G and Unilever should measure the value of each brand separately, since the consumer is usually unaware of the corporate brand.Brand ManagementMuch has been written about brand management, but a thorough investigation using the Tefen-Globes-Giza model shows that a company must invest its efforts on three main fronts to squeeze the most out of its brand: volume, premium, and branding expenditure. Correct management on the three fronts will maximize the brand’s economic potential for the company, thus creating value for both the company and the consumer.The product and its characteristics are fundamental to creating high brand equity. Comparisons cannot be drawn between products and services provided in a saturated market to those in “blue oceans,” which can grow much more and for which the consumer will pay much greater premiums. Therefore, brand equity is not only a function of the brand itself, but is also influenced by market characteristics such as regulation, entry barriers, and steadiness of demand.The company usually cannot affect these external parameters, but should be aware of them. There are three main factors which can be influenced and can increase brand equity: volume, premium, and branding expenditure.VolumeNaturally, the three parameters affect one another. Product volume is affected by the premium charged from the consumer, which in turn is affected by the investment in marketing the brand.
There are many ways to stimulate volume demand for a product, such as stretching the brand or approaching new consumer segments. Adjusting the value offering of the brand to changing market needs is critical to maintaining sales.Let’s take the example of Ford and Toyota, which were measured using the Interbrand global brands model. In 2003 both companies had roughly the same brand value ($17 billion for Ford and $20 billion for Toyota). By 2007, however, Toyota had a brand value of $32 billion while Ford’s had shrunk to $9 billion. The Globes-Tefen “brands index,” an annual study of the 100 leading brands in Israel, likewise showed that Toyota’s brand value in Israel increased by 32% from 2002 to 2007, while Ford’s dropped in real terms, losing 2% in the five years.How does a thing like that happen? Toyota identified rising demand for economic and environmentally friendly cars, while Ford continued to make gas guzzlers and SUVs. The Detroit giant misread the future of the market and lost miles to their rival from Japan. Toyota recognized the market’s yearning for “green” and adjusted its model, offering perceived added value to the consumer in the form of more efficient cars.The success of the Toyota Prius and the good press the model received showed that identifying and meeting existing demand required lower investment on the brand than the standard models launched by the other car companies.PremiumThe premium charged for the brand is the difference between the price of the branded products and the price of comparable products lacking branding. The premium positions the brand, and determines its profitability.Setting the premium lower forces the manufacturer to drive heavy demand for the product in order to achieve high brand value. Drumming up demand of that magnitude requires heavy investment in branding, which in and of itself, diminishes the brand value. On the other hand, setting the premium too high can hurt sales and stunt growth.To properly set the premium the brand can collect, the manufacturer must know the market inside and out: the competition and consumers. It also depends on the positioning of the brand itself – is it a luxury brand? Does the added value that it brings the client justify a high premium? What is the highest possible premium under prevailing market conditions?Luxury brands are the best example of charging a high premium in exchange for added value, for the feeling of exclusiveness and perceived quality. If a mass market brand can command a premium of up to 30%, then for a luxury brand the premium could reach more than 90%. The Interbrand index of 100 global brands includes three luxury brands of Louis Vuitton – Moet & Chandon, Louis Vuitton, and Hennessy. Louis Vuitton has a brand equity of more than $20 billion.Another area where brands command high premiums is sports. The Tefen-Globes-Giza brands model places Nike Israel and Toyota Israel side by side, with a negligible difference of 2.5% between their brand values. However, Toyota Israel’s sales turnover is much greater than that of Nike Israel. The reason for their practically identical brand value is the premium that Nike charges, meaning the percent of the price that the customer is paying for the pleasure of the brand. It can be more than 50% of the final price. Toyota, which is considered expensive for a non-luxury brand, charges a premium of less than half that of Nike.Brand expenditureThis front includes all the direct expenditure on branding your product, from studying the market to designing the product to marketing -whether the branding is above or below it. This does not include actual product development costs, but focuses on expenditure that advances the product as a brand.The company’s goal is to optimize these expenses while preserving the values of the brand, whether at the level of design or experience. Ideally, the product and the value that the consumer derives from it, should speak for itself. Positive buzz, or word of mouth, can be major marketing tools.Our index of the 100 leading brands in Israel placed Google Israel in 21st place, and immediately following it was the Danone dairy brand. The brand value of the two brands was practically identical, even though Danone’s local branch makes more than double the revenue of Google Israel. How is this possible? Danone spends terrific sums of money in marketing and promotion, while Google relies on the good name of its parent company and the strength of its products. Compared with peer enterprises, it invests relatively little on branding itself, which inflates its brand equity to beyond that of heavy-spending Danone.A Juggling ActBalancing between volume, the premium, and branding expenditure is a perpetual juggling act by the brand manager throughout the brand’s lifetime. The manager’s purpose is to maximize the value of the brand for the company and the consumer. Maximizing the brand’s economic value should be a basic goal of strategic planning, alongside the company’s desire to maximize shareholder value. Management should ask whether the brand is realizing its full financial potential.Volume, the premium, and branding expenditure are interlinked. Change one and you change the rest, directly affecting brand value. Measuring these components is not trivial, but it is necessary to keep track of brand value and to design a strategy to maximize it. A company that wants to maximize value must keep constant track of these parameters, and define goals and work plans, which should all be a part of its corporate marketing strategy.

How to Get Discount Renters Insurance

There are some people who rent property under the assumption their assets will be covered by their landlord’s insurance. Sadly, they often discover they were mistaken only when disaster strikes and they don’t receive compensation. With the wide availability of discount renters insurance nowadays, there’s no excuse for not protecting yourself. Furthermore, a landlord’s insurance only insures the property rented, while the items inside it fall under the responsibility of the renters themselves.One of the easiest ways to find cheap insurance is to go online. Insurance comparison websites are a dime a dozen these days and serve to aggregate the best quotes you could hope for. All that a person looking for affordable coverage has to do is fill out some basic personal details relevant to the search and submit them before the quotes are obtained. The companies usually affiliated with such sites are ones that are highly rated. Additionally, information is provided so that an applicant can directly contact an insurance agency with any further questions.Another way to obtain discount renters insurance is for a person to raise their insurance deductible. A large deductible also prevents a person from making too many small claims on their renters insurance. This works in the policy-holder’s favor as many insurance agencies tend to add surcharges ranging from 10-85 percent based on the number of claims the policy-holder files throughout a given period.Buying a policy for rented property from the same agency as the one from which auto insurance is bought is another means of getting discount renters insurance. Package deals are a way for insurance agencies to attract policy-holders and offer substantial savings on premiums paid by existing policy-holders. Most of the time, insurance agents are more than happy to tell you just what a discount entails.You should never compromise on personal safety, especially when living in property you don’t own. Insurance policies for tenants are generally extremely affordable as a rule, and there are always ways to obtain even cheaper premiums.

Calendars, Time, & Numerology – Egyptian Roots & Mathematical Precision of Our Modern Calendar

Civilization has always depended on accurate time-
keeping systems. Success with the timing of agricultural
matters, financial concerns including markets, accounting
and taxes, and seasonal celebrations such as festivals,
all require an accurate method of counting time. The
rhythm of time is defined as ordered recurrence in fixed
intervals.Regular astronomical cycles such as the daily rising
and setting of stars like the Sun and the waxing and
waning of the Moon, and their connection to the Earth’s
seasons and seasonal events, gave the ancients standards
by which to form calendars and time counting systems.The obsession with time-keeping and its link to
numerological calculations eventually reveals the
awareness of an unexplained, ordered, omnipresent
intelligence; a sort of cosmic, or “universal time,”
and how it’s intimately linked to calendar formation
and reform, no matter how random each may seem.
Time is far deeper than a simple clock reading, it’s
a rhythm that ties everything together and links the
human microcosm to the macrocosmic “all that is.”
Calendar numerology allows you to recognize its pulse
and therefore forecast personal circumstances and
events linked to its tempo.In addition to the prevailing calendar, in our view,
being automatically and mysteriously coordinated to
everyone’s life through various forms of numerology,
there is a surprising amount of mathematical precision
involving astronomical cycles relating to the history of
the formation our modern calendar. We feel this lends a
great deal of reliability to its successful use as a basis for
numerological calculations.We believe that souls incarnate on Earth with the timing
of their fated life circumstances and events (symbolized
by comprehensive cyclical timing and delineation
methods) synchronized with the predominant calendar
of the time, that being currently the modern solar-cycle
based Gregorian calendar with its 365 days and 12 months.Our research tells us that modern and ancient numerological
date-based methods produce the most accurate results
using the modern, every-day calendar as mentioned above.
In most places in the world, if you ask what date it is, you’ll
receive an answer reflecting a Gregorian calendar date; it’s
a universal calendar (unlike others) and the main
synchronization system for most of the Earth’s inhabitants.
We’re convinced it’s intimately connected with “what is,”
seen through personality and predictive techniques that
utilize its configuration.The modern calendar is the international scientific,
commercial, and administrative standard today. It
represents the pulse of humanity and its roots are in
ancient Egypt.Calendar revisions throughout history have represented
shifts toward a closer alignment with the progression of
time. Multitudes and multitudes of constantly operating
short, medium, and long-term time cycles tied to our
solar calendar symbolize time, how it operates on a
universal level, and its relationship to everyone under
the Sun as it transpires on this plane, displayed through
personal time cycles. These cycles outline fated personal
circumstances and events, including spiritual progression.
Being “in the flow,” or “at the right place at the right time,”
are ways of noting harmonization with the advancement
of time, both on a universal and personal level.Some claim that the “consciousness” of the Earth’s
inhabitants changes due to calendar revisions, but we
believe that all changes are simply illustrative of what
was fated to happen anyway. They don’t, by themselves,
make things happen any more than changing one’s hair
color makes one younger.Ancient astronomers (frequently priests of various faiths)
perched on their temple towers, working in conjunction
with the land’s king or ruler, would meticulously record
astronomical observations, eventually developing systems
by which to measure some of the natural cycles of this
planet.Evidence shows that the Sumerians, around 4000 years
ago in Mesopotamia (modern-day Iraq and surrounding
area), were possibly the first culture in the Earth’s recorded
history to formulate a formal solar calendar, which had 365
days. The Babylonians (after approximately 2500 BC) also
devised an official calendar, but based it on solar and lunar
cycles (lunisolar). The Hebrew calendar is also lunisolar
and its origins are believed to be linked to the Babylonians.The most accurate ancient lunar calendar may have been
formulated by the Chinese after approximately 500 BC.
Although based on lunar cycles, it’s really a lunisolar
calendar, like the Babylonian and Hebrew calendars; its
starting point varies each year being roughly synchronized
with the solar calendar/tropical year (about 365 days long).The Mayans appeared to possess the most accurate calendar
in recorded history up until around 1000 AD, varying less
than 1 minute a year from our modern Gregorian.The Persian calendar in the Middle Ages around 1070
AD, thanks to astronomer Omar Khayyam, surpassed
the accuracy of the Mayan model. This is not surprising,
considering the Persians’ and Arabs’ superior scientific
(especially astrological) contributions in the Middle
Ages. After Omar Khayyam’s Persian calendar
corrections were officially adopted, this calendar was
also more accurate than the Julian calendar, which
preceded our current Gregorian calendar. Omar Khayyam
calculated the solar year to be 365.24219858156 days
long, accurate to the sixth decimal place.The ancient Egyptians formed a calendar (twelve
thirty-day months plus five days to equal 365 days)
before 2400 BC based on the star Sirius (they called
this star Sothis). They noticed that this star would
appear in the east just before sunrise every year around
the time of the Nile’s annual flood. A Sothic cycle is
1460 years and is defined by the heliacal rising of Sirius
returning to the exact same point. Respected for its
mathematical reliability, this calendar was used by
astronomers in the Middle Ages.The Egyptians’ seasonal year, the time between the
consecutive heliacal risings of the star Sirius, is
remarkably close to the actual length of the solar year.
However, the approximate six hour difference means
that over just a couple of centuries their calendar would
have been totally out of synch with the timing of the
seasons in relation to the solar year. The Egyptian
astronomers quickly identified this problem and
apparently tried to compensate by using a second
lunar calendar, which tied into the solar cycle. A
lunar calendar was also followed for festivals.The Romans, under Julius Cesar, influenced by the
astronomer Sisogenes of Alexandria Egypt, recognized
the sophisticated astronomical skills of the Egyptians
and adopted the Egyptian star (Sirius) calendar around
50 BC, and added one day to the calendar every four
years (leap year) to adapt to the solar cycle. They
abandoned their lunar calendar and the Julian calendar,
forerunner to our modern Gregorian calendar, was born.An aside, a Metonic cycle (invented by the 5th century BC
Greek astronomer Meton) is 6940 days including 235 lunar
months comprising almost exactly 19 solar years. The
19-year cycle is significant as every 19 years the Moon
and the Sun are aspected identically, on the same day of
the year (the Metonic cycle’s error rate is about 12 hours
every 109.5 years: 19 tropical years = 6939.602 days and
235 synodic months = 6939.688 days).A Callippic cycle (presented in 4th century BC by the
Greek astronomer Callippus) is a 76-year cycle equivalent
to four Metonic cycles, less one day. It’s a modification of
the Metonic cycle. These cycles, widely used by ancient
Egyptian and other astronomers before the Alexandrian
calendar reform (under Julius Cesar), are important for
sequential functions, and are superb cyclical timing
considerations that can be used to outline fated life
circumstances.It’s interesting that the Julian calendar’s implementation
took place in year 1 of a Metonic cycle, 19 years from a
complete 76-year Callipic cycle, which suggests that the
designers of the calendar were heavily influenced by the
standards of the mathematical precision of the Metonic
and Callippic cycles.Even though the .25/day addition every year resulted in
the Julian calendar being only about .00781 days from
the true solar cycle, this difference yielded about a ten
day error by the 1500′s.In 1582 the Gregorian calendar reform was adopted under
the reign of Pope Gregory XIII to correct the inaccuracies
of the Julian calendar. Striving for mathematical exactitude
in calculating the length of the tropical year (the cycle of
the seasons or solar year, defined as the time interval
between vernal equinoxes), the scientists of that era
dictated that the new universal calendar first drop 11
days from the old calendar as of October 4th, 1582
(making that day October 15th) and then initiated a
leap year system adding a day every four years (except
in century years evenly divisible by 400 or 4000).
Although not perfect, this improved the solar calendar
year to 365.2422 days, an error of about one day every
3300 years.Today’s calendar year begins in January conceivably
because it’s the first full month when the days start
growing longer (minutes of daily sunlight increasing
in the Northern Hemisphere, which includes most
of the world’s land and about 90% of the human
population), after the Winter Solstice at the end of
December. Additionally, the planet Saturn mutually
ruling time and the sign of Capricorn might have
something to do with the selection of January as the
first month of the calendar year. The seven day week
division is probably linked to ancient farmers planting
by the moon’s phases (seven day quarters). As to why
the day officially starts at 12:00 a.m. and not sunrise,
it’s possibly due to the fact that after 12:00 a.m. the Sun
departs from its daily nadir (in relation to the Earth) as it
begins its ascent to the midheaven, which it reaches at
Noon.After the 1600′s the Gregorian calendar was finally used
throughout most of Europe and was adopted by what is
now the east coast of America in the mid 1700′s, before
1776, the recognized birth year of America. Greece and
Russia avoided using it until the early 1900′s. Japan
formally implemented it in 1873, Korea in 1896, and
China in 1912.We feel accuracy in date-based numerology has always
been due to a combination of the soundness of empirically-
based numerology calculations, a mystifying link to the
prevailing calendar of the day, along with the precision of
that calendar in relation to cyclical earthly occurrences (like
the solar cycle).Other-dimensional forces beyond human comprehension
serve to automatically synchronize one’s birth data (day,
month, year, etc. of the calendar system) with one’s timing
and personality (each mirrors the other), as symbolized by
the numerology aspects that comprise the patterns that are
the basis for delineation and prediction.We conclude that the current universal calendar’s gradual
formation was very deliberate and calculated and its
mathematical soundness and link to cosmic time, or
universal intelligence, allows for calendar-based
numerology, like that found in our Numerology Decoder
and Time Cycle Decoder software programs, to precisely
outline how every person is uniquely connected to the
all-encompassing rhythm known as time.Copyright © 2007 Scott Petullo, Stephen Petullo